Charlie Neighborgal/Associated Press
Wendy’s said its digital menu boards “make it easier to offer discounts and great deals to our customers, especially during slower times of the day.”
Editor’s note: Jeff Yang He is a frequent contributor to CNN Opinion. He is co-host of the podcast “They Call Us Bruce” and co-author of the best-selling book “They Call Us Bruce”.Rise: Asian American Pop History from the ’90s to the PresentHe is also the author of “.Golden Screen: The Movies That Made Asian America.The opinions expressed in this commentary are his own.read more opinions On CNN.
CNN
—
When Kirk Tanner The CEO of Wendy’s, the fast-food chain known for its cheeky pigtail mascot and square beef patties, announced in its latest earnings call that it is testing new digital menu technology, but Wall Street For analysts, it must have been a one-off event. Instead, it sparked a media firestorm for the burger business, fueling social media two weeks later.
That’s because on Wednesday, sharp-eyed economic reporters said Tanner’s presentation included references to using menus to introduce “dynamic pricing,” or menu prices that fluctuate throughout the day. This is because I pointed out that
This is the pricing strategy we know and despise in transit. There, express lanes have long had “congestion” charges during rush hour congestion, and ticket prices have soared as demand surges around holidays.
The most infuriating modern variant of this is the ride-sharing industry’s use of surge pricing. This means that when the number of exhausted people trying to get home outweighs the number of frustrated drivers picking them up, the cost of transportation from services like Uber and Lyft automatically increases. is. enthusiastic request.
This often means paying double or triple the normal rate for popular landing times (which could mean having your luggage shipped from a badly delayed Thanksgiving flight to a completely different city). (It’s kind of a bonus if you just brought it down.)
Mr. Tanner’s mention of dynamic pricing led observers to believe the chain could raise the price of an ice-cold Frosty on a dry summer afternoon or raise the price of a Baconator during the lunch rush. I imagined that it might be.
As the backlash mounted, Wendy’s was forced to issue a statement saying the media had misinterpreted the company’s dynamic pricing plan as focusing on raising prices during peak demand periods. Instead, the chain claimed that its digital menu boards “make it easier to offer discounts and valuable offers to customers, especially during slower times of the day.”
That may have softened the public’s mood a little. But in reality, what we sometimes call “dynamic discounting” instead of surge pricing is just another way companies use price discrimination. This is an economic term that means imposing different costs on people with different demand profiles. to extract maximum profits.
Yes, a straggler looking for a loaded nacho chicken sandwich at 11am. You could potentially benefit from a discount of a few cents. However, in reality, such dynamic discounts may only be used to cushion the impact of future price increases.
And it’s easy to see how that could backfire, considering how smoothly people can shift gears from chain to chain when they don’t feel they’re getting their money’s worth. Discounts at odd hours may draw in some select customers, but not knowing how much of a hit it will take on your wallet when you want to eat a Dave’s Double often leaves you already on the brink of crisis. Add unnecessary anxiety to the world you feel. existential abyss, which can alienate customers more generally.
(Again, this could also be Wendy’s hidden profit-boosting strategy: ordering fast food can be so stressful that you end up snacking on the mood.)
Get our free weekly newsletter
After all, consumers’ desire for cost certainty is a powerful force. This is why all-you-can-eat menus are so popular (Red Lobster and its Ultimate Endless Shrimp, the endless carb load of Olive Garden’s Never End Pasta Bowl, and Belly are great examples) ) – the best buffet selections from all over America). In fact, fixed pricing is so attractive that he’s introduced Netflix-style fast food subscriptions like his $10 Taco Lover’s Pass at Taco Bell and his $120 annual all-you-can-drink membership at Panera. There are also many restaurants.
But the truth is, the fuss over dynamic pricing was probably a bit overblown. This is the other half of Wendy’s new high-tech offering, and it could end up being even more head-bobbing.
As Tanner said, the new menu will also allow for experiments with “menu changes and suggested sales using AI.” Let Chance the Rapper with his six-fingered red pigtails generated by AI tempt you with Spicy His Chicken His Nuggets add-on customized to the customer with captivating text-to-speech?
Talk about staring into the abyss of existence.